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Fiscal general information

Personal income tax

In Romania, personal income is taxed at a flat rate of 10%. As it can be seen from the graph bellow it is one of the lowest individual tax rates in EU, the EU average being 38%.

Personal income tax 2018

Source: KPMG tax

Corporate income tax

At the same time, the standard corporate income tax rate is 16%.  Also in this case, it is one of the lowest in Europe, under the average of 21% for EU. Dividend income distributed as of 1 January 2016 is subject to 5% income tax.

Corporate income tax 2018

Source: KPMG tax

Fiscal incentives

The government is committed to reducing the tax burden. Starting with 1 January 2017, the VAT rate was lowered to 19%, and it will be followed by another drop to 18% in 2018. At the same time, the VAT rates on food items are 9% and on some forms of entertainment is 5%. It is planed from 1 March 2017 the extension of the 0% VAT for sale of housing, advertising and inputs in agriculture.

Regarding fiscal incentives, the Romanian fiscal code includes a 16% profit tax exemption for reinvested profits in new technological equipment used for business purposes and an exemption on the 16% income tax for employees working in the IT and R&D sector.

VAT Rates 2018

Source: KPMG tax